Business Unit Segment Information

Segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the Company's Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of the Company’s reportable segments. The Company’s segments are organized in a manner consistent with which discrete financial information is available and evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance.

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by the CODM. The CODM is the Company’s chief executive officer.

Each of the operating segments are directly responsible for revenue and expenses related to their operations including direct segment administrative costs. Finance, information technology, human resources, and legal are shared functions that are not allocated back to the two operating segments. The CODM assesses the performance of each operating segment using information about its revenue and gross profit as its primary measure of performance, but does not evaluate segments using discrete asset information. There are no inter-segment transactions and the Company does not allocate interest and other income, interest expense, depreciation and amortization or taxes to operating segments. The accounting policies for segment reporting are the same as for the Company as a whole.

The operating segments are internally reported to the Company's CODM as Segment One (Commercial) and Segment Two (Aviation).

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Segment One (Commercial) encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as shuttle and ground transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.


•	Segment Two (Aviation) encompasses our services in aviation (i.e., airports, airline and certain hospitality clients with baggage and parking services) as well as ancillary services, which include shuttle and ground transportation services, valet services, baggage handling, baggage repair and replacement, remote airline check-in services, wheelchair assist services and other services.


•	"Other" consists of ancillary revenue that is not specifically identifiable to Segments One or Two and certain unallocated items, such as and including prior year insurance reserve adjustments/costs and other corporate items.

The business is managed based on segments administered by executive officers.

The following is a summary of revenues and gross profit by operating segment for the three months ended March 31, 2019 and 2018:



	Three Months Ended
(millions) (unaudited)	March 31, 2019			Gross Margin %		March 31, 2018			Gross Margin %
Services Revenue
Segment One
Lease type contracts	$	90.6				$	93.1
Management type contracts	67.6					69.5
Total Segment One	158.2					162.6
Segment Two
Lease type contracts	7.0					6.4
Management type contracts	63.2					22.3
Total Segment Two	70.2					28.7
Other
Lease type contracts	0.2					—
Management type contracts	2.1					2.6
Total Other	2.3					2.6
Reimbursed management type contract revenue	178.7					172.9
Total Services Revenue	$	409.4				$	366.8
Gross Profit
Segment One
Lease type contracts	$	4.7		5	%	$	2.3		2	%
Management type contracts	23.5			35	%	23.7			34	%
Total Segment One	28.2					26.0
Segment Two
Lease type contracts	1.4			20	%	1.4			22	%
Management type contracts	15.8			25	%	5.9			26	%
Total Segment Two	17.2					7.3
Other
Lease type contracts	2.0			1,000	%	1.2			—	%
Management type contracts	5.8			276	%	4.9			188	%
Total Other	7.8					6.1
Total gross profit	$	53.2				$	39.4
General and administrative expenses	27.1					22.3
General and administrative expense percentage of gross profit	51		%			57		%
Depreciation and amortization	7.2					4.0
Operating income	18.9					13.1
Other expenses (income)
Interest expense	5.0					2.1
Interest income	(0.1		)			(0.1		)
Equity earnings from investment in unconsolidated entity	—					(10.1		)
Total other expenses (income)	4.9					(8.1		)
Earnings before income taxes	14.0					21.2
Income tax expense	3.1					5.3
Net income	10.9					15.9
Less: Net income attributable to noncontrolling interest	0.3					0.6
Net income attributable to SP Plus Corporation	$	10.6				$	15.3